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Nifty 50 December futures (16,850)
The Nifty 50 and the Sensex began today’s session with a gap-up as the Asian markets sent out bullish signals. Thus, the Indian benchmarks opened on the front foot and rallied; they are now up by 1.25 per cent each. Among the Asian major indices, ASX 200, Nikkei 225, Hang Seng and KOSPI are up between 0.6 and 2 per cent for the day so far.
The market breadth of the Nifty 50 indicates similar positive bias as the advance-decline ratio stands at 46-4. All the mid- and small-cap indices too are in the green, gaining between 1.3 and 2 per cent. Similarly, all the sectoral indices are up today. The Nifty Metal is the top gainer, up by 3.2 per cent followed by the Nifty Realty, up by 2.2 per cent.
Futures
The December futures of the Nifty opened the session with a considerable gap-up at 16,751 versus yesterday’s close of 16,635. Thereafter, it rallied and is now hovering around the critical level of 16,850.
Although the broader market looks positive and it has been supported by positive Asian market and the market breadth, we could see only a limited upside potential from current levels. While 16,850 is a strong resistance, a rally beyond this can face hurdle at 16,940. Notably, a recovery beyond 17,000 is very unlikely as the recent trend has been bearish. So, the contract can be expected to make a U-turn downwards anywhere between 16,850 and 17,000. This can result in Nifty futures declining to 16,750 and then towards 16,650. Subsequent support is at 16,500.
Thus, traders can initiate fresh shorts at current levels and add more shorts if the contract rallies to 16,940. Place initial stop-loss at 17,025. When the contract falls below 16,750, revise down the stop-loss to 16,850. Book 50 per cent profit at 16,650. Thereafter, shift stop-loss to 16,750 and liquidate the remaining at 16,500.
Strategy
Initiate fresh shorts at current level and on a rise to 16,940 with an initial stop-loss at 17,025. When the contract falls below 16,750, revise down the stop-loss to 16,850. Book 50 per cent profit at 16,650. Thereafter, shift stop-loss to 16,750 and liquidate the remaining at 16,500.
Supports
16,750 and 16,650
Resistances
16,940 and 17,000
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